An excellent bit of Home-Owner-Ist cant in The Daily Mail:
Homebuyers could be battered by a credit clampdown next year if a £300 billion black hole in mortgage funding is not plugged.
Experts have warned that borrowers face higher interest rates, bigger fees, tougher credit scoring and a greater risk of being rejected. Loans to those with small deposits could be withdrawn or carry such high interest rates that they would become unaffordable. All this could bring the recovery in the housing market to a shuddering halt and send prices crashing in parts of the country. Some economists predict a staggering 20 pc plunge in prices, wiping £34,000 off the average £167,802 home.
OK, let's not forget that the so-called '£300 billion black hole in mortgage funding' is currently being bridged by the government using taxpayers' finest. Let's assume that their logic is correct, and that if the government insisted that the banks fulfil the terms of the original taxpayer-funded bridging loan and start repaying it in April 2011 (scroll down to One fly in the ointment, depending on whom you believe, about a fifth of that bridging loan will have to be written off), house prices will fall by 20%.
There would be a small number of losers from this (i.e. net sellers of housing - people who inherit a property they don't need; landlords who are scaling down; people who want to sell up and move abroad; or people who over borrowed and are repossessed); there will be a lot of people not affected (people who intend to stay where they are or who are trading up or down slightly) and...
... an enormous number of winners; i.e. the millions of people aged thirty-five or below who have hitherto been priced out completely, or who are stuck somewhere much too small to start a family (and if the right-wingers are going to harp on about 'encouraging marriage and stable families', then let's be consistent at least, eh?).
So that £300 billion 'taxpayer funded bridging loan'/'funding black hole'* is just another mechanism of transferring wealth from the productive economy and young people to people who already own housing and land.
Most of the comments under the Mail article are surprisingly sensible. If you want to read some real Home-Owner-Ist bile, try the comments at the end of this article in The Times - inevitably, some commenters deride Oliver Kamm as a "Socialist", which is nonsense. Centre-right think tank Policy Exchange have published a lot of his musings on liberalising the planning system. A very nice chap he is too and a Socialist he is not.
* Delete according to personal preference.
I Guess She Just Couldn't Be The Bigger Person About It..?
29 minutes ago
11 comments:
If so then "Adam Smith was a communist"...
Where can I get my £34,000 (or whatever) compensation from, please? Cash will do fine. Brown paper bag or briefcase, I'm not (that) fussy :-))
It must be my turn soon.......
I don't get this idea of putting CGT on all homes. I posited the arguement that instead of pulling the tax up to make it the same on everything, we should bring it down (on shares, 2nd houses) as less tax is a good thing, surely? My father though, who is a Conservative councillor, looked at me as if I were mad and instantly suggested extending CGT to first homes to redress the imbalance.
Such is the mentality of those in Government. If there is an imbalance in the system because of a tax, just tax everything else the same.....
AC1, I don't think Adam Smith had any particular leanings, he just described the world the way it is.
FT, are you a potential buyer or a potential seller of housing?
EKTWP, CGT is a shit tax for a hundred and one moral or practical reasons. LVT is the way to go.
"less tax is a good thing, surely?"
Yes of course. But don't forget, while it is [intellectually] quite easy to reduce or scrap publicly collected taxes, there is an irreducible minimum of privately collected taxes arising from all state-protected monopolies, aka 'rents' (sources of income which cannot be competed away by the free markets).
These arise primarily on land values, but there are plenty of other examples - radio spectrum, landing slots at airports, oil exploration rights, cherished number plates etc.
I was thinking, since I don't own land, and I don't have cash deposits that my government has guaranteed and so on, that perhaps I should try and go on a massive credit spending spree. When the shit hits the fan next month or whenever again, maybe then instead of making me go bankrupt they will either have to bail me out or everyone who has extended me credit will already be bust and I will simply repudiate the debt I built up with them.
What d'ya reckon?
Jock, sorry to disappoint, but Hallowed Status is only given to debts used to prop up the house price bubble.
If you don't 'own' land and have run up debts then you are Consumerist Scum.
But surely I'd be "keeping the real economy going" - you know, buying *stuff*. I could write a little chitty to say I won't buy anything made in China (except an iPad).
JC, nope. If you were patriotic you would shun shallow consumerism and devote every penny to buying the biggest and most expesive house possible and spend the rest of your life paying off the mortgage.
Okay, what if I only accept credit from foreign sources - you know, Salamander or whatever they are called, and First General Motors Capital and so on? I could buy a Range Rover, using Indian credit but securing British jobs maybe? I think this is just an extension of the policies implemented by Mr Mandelbum over the past couple of years. After all, he must have known also that he wouldn't have the money to repay his debts and largesse.
JC, wot?
Buy something from the productive economy for your shallow personal pleasure? Not very patriotic, is it? Rover should be exporting those cars and you should 'invest in land' because 'house prices may only go up (continued page 94)'.
My thoughts on CGT on main homes is that not applying it is more of a recognition of the fact that it is not a real gain (as you still need somewhere to live) than a pandering to the HOists.
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